Evaluate existing insurance before buying stand-alone cyber coverage
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LONDON — Companies assessing and seeking to transfer cyber-related risks should do so in an integrated way and evaluate insurance coverages that they may already have in place before buying stand-alone cyber coverage, according to a broker.
Cyber risks constantly are changing and need to be viewed in sector-specific and company-specific ways, according to Peter Hacker, partner and executive chairman of the communications, media and technology team at London-based brokerage Jardine Lloyd Thompson Group P.L.C.
Insurance buyers must look at the entire risk landscape of their companies when seeking to mitigate and transfer cyber-related risks and involve representatives of many parts of the company, including information technology, legal, supply chain and business continuity management functions, he said.
“Cyber risk is a very important risk, but it is absolutely integrated with other risks,” Mr. Hacker said during a roundtable on cyber risks Wednesday in London.
Buyers should stress-test the insurance coverages they already have to determine whether certain risks arising from cyber exposures would be covered, he said.
Insurance coverage is just the “cherry on the cake,” he added, and pointed out that of all the costs arising from cyber breaches, only about 10% are insured on average.
Mr. Hacker said that the global market for stand-alone cyber insurance has a premium volume of about $1.5 billion to $2 billion. Regions including Europe, Asia and Latin America are expected to see greater take-up of cyber coverages as legislation is introduced.
In the United States, about 20% to 25% of companies buy stand-alone cyber insurance policies, he said.
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